We study the mechanism by which transcription is regulated by activators, repressors, terminators, and anti-terminators by using the galactose opern in Escherichia coli as an experimental system. The gal operon is transcribed by two tandem promoters, P1 and P2, which are regulated in different ways by several regulatory proteins. We report several discoveries made this year. (i) The assembly of the Gal repressosome, a higher order nucleoprotein complex that represses transcription of the gal operon in Escherichia coli, involves the formation of a DNA loop encompassing the promoter segment. GalR dimers bound to two spatially separated operators, OE and OK, specifically interact with the histone-like protein HU and close the loop in supercoiled DNA. We isolated and characterized a GalR mutant containing an amino acid substitution (R282L) that can repress transcription in the absence of HU and supercoiled DNA both in vivo and in vitro. Repression involves the same DNA looping: deletion of either OE or OI makes the mutant GalR ineffective in repression. This and other results suggest that the R282L substitution increases the normal affinity between two DNA-bound GalR dimers, allowing looping. We conclude that GalR dimers interact directly and do not use HU as an adaptor in loop closure; HU and DNA supercoiling act in concert to stabilize the GalR tetramer. The stronger GalR-GalR interaction also made the gal transcription non-inducible, suggesting that the inducer binding acts by modulating tetramerization. (ii) Isomerization of a closed to open complex of a promoter upon RNA polymerase binding involves base unpairing at the - 10 region. After potassium permanganate sensitivity of unpaired thymine residues, we studied base unpairing at the - 10 region during isomerization upon RNA polymerase binding at the P1 and P3 promoters of the gal operon. Substitution of adenine by 2-amino purine (2-AP) at the invariable A-T base pair at the - 11 position of P1 and P3 prevented unpairing not only at that position but also at the other downstream positions, suggesting a "master" role of the adenine base at - 11 of the template strand in overall base unpairing. 2-AP at - 11 did not inhibit the formation of RNA polymerase promoter complex and subsequent isomerization of the polymerase. Substitution of adenine by 2-AP at several other positions did not affect thymine unpairing. Changing the position of the amino group from C6 in adenine to C2 in 2-AP is mutational only at the master switch position, - 11. (iii) A gene regulatory protein with helix-turn-helix (HTH) DNA-binding motif, GalS contains a functional operator within the DNA sequence encoding the HTH region (Nature 369 (1994) 314). We searched for operator-like sequences within the DNA sequences encoding the binding motifs of other regulatory proteins. Five such proteins, DeoR, CytR, LRP, LuxR and PurR, were found to have actual operator-like sequences in the DNA sequences encoding the DNA-binding motif. Except DeoR, all of them including GalS, are known auto-regulated. Auto-regulation in case of DeoR has not been investigated. Seven other proteins containing a HTH motif, do not operate-like sequences in the DNA sequences encoding the HTH motif; none of them, except MerR, are known to be auto-regulated DNA binding proteins may have evolved from a comon ancestor containing a DNA binding site within its gene segment that encode DNA-binding motif to facilitate auto-regulation. We have discussed current evidence of monophyletic or polyphyletic origin of sequences.